The possibilities are endless. And they are becoming a reality everywhere around us. Moreover, this innovation, the smart machine, is unique because in addition to improving consumer engagement and potentially sales, it helps companies save costs and improve their supply chain. A double bonus!
Let's first look at a few cost and revenue levers, and then examine the underlying capabilities that must be developed for this to bear real results.
An innovation that supports both marketing and operations is a boon. Smart equipment networks first seen (or publicized) in Japan in the form of intelligent vending machines and introduced in the U.S. by companies such as Coca-Cola Freestyle are seeing accelerated adoption. Telecom providers such as Verizon are integrating devices in different ways thus strengthening the communications backbone. This, in turn, is leading to several solution providers building remote device management and data routing capabilities. This completes the ecosystem required for effective commercialization of smart machines.
The marketing perspectives run the gamut of features. Some typical categories of use cases are:
1. Supporting product research and launch:
Coke Freestyle has demonstrated the effectiveness of releasing new trial recipes in select markets, gathering consumer feedback and then beginning full-scale production. This is a powerful concept and takes one step further the virtual store simulations performed today to improve shelf spacing and understand product packaging appeal.
2. Retailer sales
A better customer experience improves attendance and purchase volumes. Restaurants that have installed the Coke Freestyle are noticing hundreds of percentage points increases in sales. Do consumers really want more? Are they experimenting with beverages more? Or is it just novelty? Regardless, just like keeping children's toys low in the checkout aisle helped sell more, the sales of beverages has greatly increased by providing consumers with an intriguing order process.
3. Promotions management
Targeted and localized promotions are not a wish list item any more. Centrally controlled devices can be sent promotions based on local events. Feedback from these promotions can be captured in real time and adjustments made for the next campaign. So, for example, when the Steelers win, all Steelers fans all over the U.S. get a free Coke. This opens up a whole new spectrum of promotions management through use of fan communities and engaging the consumer in the planning process. Who sponsors the free Coke? Maybe the Steelers!
4. Marketing data capture
Consumer interaction such as in the Steelers example will supplement the broad-based demographic information already available. In addition, direct consumer interaction opens up new ways to access the consumers' network and spending patterns in new ways. The limits will only be set by what you can address. For example, by entering their phone number they register which football team they support.
5. Customer engagement
Smart machines also provide methods for better customer engagement as customized interactive content can be sent to the machines. Examples of these tools include interactive menus, games and brief surveys.
Operational perspectives too present new opportunities:
1. Infrastructure support:
An intelligent machine can not only send alerts when it encounters a problem but also allow remote diagnostics and repair capabilities. GPS-enabled machines will also support location management and movement of machines. Verizon's smart-home campaign is based on the ability to communicate with devices on operational aspects. Coke Freestyle can send an alert when ingredients are low thus taking our guesswork and demand fluctuations out of the equation.
2. Fulfillment support
Planning of routes with up-to-date information from the machines enables distribution planning at a more granular level dramatically reducing costs (inventory carrying and distribution) and time to replenishment. At a micro level, combining service data with route plans further boosts this benefit.
3. Reconciliation and cash management
Information available from the machine at a transactional level will help reduce trade loss potential and variances between reconciliation periods.
To assess the capabilities that are critical to success we categorize them into the following buckets:
1. Process and Technology Integration
The model that has been in force for several decades will undergo a dramatic change from an information latency, automation and action orientation perspective. The entire landscape can now be considered a network with nodes representing devices with varying capabilities and various functional capabilities such as support, fulfillment, promotions, onboarding and reconciliation. In addition, the dimensions of geography, product lines and customer segmentation will have to be revisited. Consumer experience also plays a vital role in the design of the overall interaction design. The right approach to introduce sanity would be to map the processes step by step, identifying stakeholders and pinpointing variations by region, product and partner. While not all business processes need to be harmonized, knowing where the pitfalls lie will be an important risk mitigation activity.
2. Analytics and Data Integration
This area holds an important key to success while also presenting the biggest challenge. Not only will new data categories (e.g. consumer interaction) be introduced, but the analytical capabilities will have to be enhanced and be made more dynamic (speed and scope) to yield the agility required. Analytical data-marts for service, operations and marketing must be re-visited and integrated so that a one customer/consumer view is possible.
3. Change Management
Even as new processes are being deployed, there will always be older ones to manage in parallel. A robust 360-degree view of the operational landscape will be crucial to ensuring that deployments are smooth and being performed in areas with the biggest impact.
4. Partnerships and Multi-channel Integration
The smart network now necessitates an integration of customer touch points. The smart device will be complemented by mobile integration at the very least, not to mention potential online retailer and event integrations. No industry is isolated today and the smart network provides the potential to integrate these in new ways. While the CIO may retain the ownership of channels, ownership of partner networks may need collaboration with the COO and the CMO.
Deploying a smart equipment network successfully and maximizing its ROI lies in a well-orchestrated program executed with stakeholder support from all key areas, being driven directly from the CEO's leadership team agenda. Anything less, and there will be tremendous value left on the table, as well as a broken consumer and customer experience in both marketing and operational areas.
Keywords: Retail, Food and Beverage, Business Intelligence & Analytics, Asset Management, RFID, Wireless, Bar Code & Voice, Technology, Business Strategy Alignment, Global Supply Chain Management,GPS-Enabled Machines, Coca-Cola Freestyle, Marketing Data Capture
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